Help on finance question! (1 Viewer)

[sirable1]

The question is:

Explain why an owner of a new small company may be reluctant to acquire additional equity finance from shareholders


This is one of the few questions that I'm really struggling to do.

Thanks!

 

[seremify007]

Raising additional equity typically means you are diluting your own ownership interest in a company. If it is a relatively new start up company, a lot of the business isn't really bedded down whether it be strategy, products, policies/procedures, culture, etc... and by taking on additional equity and owners, you have brought in more people who want to have a say in how the business is run (seeing that they literally own it).